New York City saw a 148 percent increase in the number of new leases signed by tech firms last year, bringing the market in second behind San Francisco.
The city signed some 11 million square feet in deals among the largest US office leases by tech firms, according to analysis by CBRE Tech Insights Center.
Washington DC saw 3.7 million s/f in business while Silicon Valley leased three million square feet.
Boston remained the fifth-largest market in the 100 largest U.S. office leases by tech firms last year, remaining steady at a two percent increase from the previous year.
Technology companies claimed the biggest share of the 100 largest office leases signed in the U.S. in 2019 and Manhattan ranked ahead of all other cities as the home of many of those 100 leases.
“Manhattan had 33 transactions of 100,000 sq. ft. or greater in 2019, so it’s no surprise that our market had a strong showing among the top 100 biggest offices leases in the U.S. last year,” said Nicole LaRusso, Director of Research and Analysis for New York Tri-State at CBRE.
“Many of our large leases were done by tech companies looking to expand in the New York market, which resulted in the tech sector being the most active sector in Manhattan for the first time ever. That said, the Manhattan market is very diverse, and companies from over eight different industry sectors were represented among New York’s contributors to the U.S. top 100 leases. No other market has the depth and diversity of demand, making New York an especially attractive place for office investment.”
CBRE’s analysis of the 100 largest office leases signed last year found that the tech industry’s presence grew as the leases got bigger.
Tech companies accounted for 32.4 percednt of the nation’s 100 largest leases, outstripping its 21.9 percent share of overall office leasing activity in 2019.
In addition to tech, the other tenant industries reflected in Manhattan’s contribution to the top 100 U.S. office leases were retail, manufacturing & transportation, healthcare & education, financial services & insurance, creative industries and coworking.
CBRE’s analysis found that the software, search and e-commerce categories together accounted for 62 percent of the square footage in last year’s largest U.S. 100 tech office leases, up from a collective 41 percent share in 2018.
The gains made by those three tech sectors came as large-scale leasing activity by companies involved in social media, hardware, business services, cloud and media & entertainment industries, lessened compared to previous years.
“The largest tech firms have diversified their expansion plans so that they’re no longer overly dependent on one or two markets for hiring talent,” said Colin Yasukochi, Executive Director of CBRE’s Tech Insight Center.
“Many East Coast markets like New York and Washington, D.C. offer large tech-talent labor pools and a steady flow of tech-degree graduates.
“Given the tight labor supply and cost pressures in the Bay Area and Seattle — the two largest U.S. tech markets — the diversification trend can be expected to continue.”